# ASSTT. GEN. MANAGER, CENTRAL BANK OF INDIA ETC v. · COMMISSIONER, MUNICIPAL CORPORATION, AHMEDABAD ETC. ETC

- **Citation:** [1995] Supp. 1 S.C.R. 63
- **Court:** Supreme Court of India
- **Decided:** 1995-05-09
- **Case number:** Civil Appeal No. 5405 of 1995
- **Bench:** B.P. Jeevan Reddy, Sujata V. Manohar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/asstt-gen-manager-central-bank-of-india-etc-v-commissioner-municipal-13442
- **Pages:** 27

## Headnote

Bombay Provincial Municipal Corporation Act 1949-Ss. 406 and 407
r/w Taxation Ru/es-Rules 15 (1) and (2}-Whether tenant of a building entitled to file complaint and appeal against property tax assessment c
order-Held, yes; would not be just or equitable to deny such right-Bombay
Rents,Hotel and lodging House Rates Control Act 194-f-S.IO.
Bombay Provincial Municipal Corporation Act 1941)-/'roviso (aa) to
S.2(1A) (ii}-Whether annual rent for determining annual letting value is
D
actual rent or standard rent under the Bombay Rent Act-Held; actual rent
received is the annual rent.
S.406 of the Bombay Provincial Municipal Corporation Act, 1949
('Act') provides for appeals against fixation of rateable value or taxes to
be filed within fifteen days after accrual of the cause of complaint. AccordE
ing to clauses (a), (b) and (c) of S.407, the cause of complaint arises when
the complaint against the assessment, enhancement or determination of
property tax is disposed of by the Commissioner. Rule 15(1) of the
Taxation Rules in Schedule A to the Act provides for complaints against
assessment of rateble value. Rule 15(2) states that when the premises is
entered in the assessment book for the first time or its rateable value is F
increased, the Commissioner will give a special written notice to either the
owner or occupier of the premises informing him that any complaint
~
thereagainst will be received within fifteen days from service of the notice.
The appellants who were tenants of various buildings covered by the G
Act unsuccessfully contended before the Gujarat High Court that since the
.
'
landlord invariably passed on to them burden of increased property taxes
under s.10 of the Bombay Rents, Hotel and Lodging House Rates Control
Act, 1944 ('Bombay Rent Act'), they had a direct stake in the determination
and assessment of property tax and were accordingly entitled to file
complaints and appeals thereagainst •
H
...
63
64
SUPREME COURT REPORTS (1995) SUPP: 1 S.C.R.
A
The second contention of the appellants was that even where the
B
standard rent under the Bombay Rent Act was not fixed for the premises,
the annual rent for which the building may be expected to be left, for the
purpose of determining the annual letting value, was the standard rent
alone and not the actual rent.
Allowing the appeals in part, this Court
HELD : 1.1. Under the scheme of the Bombay Provincial Municipal
Corporations Act read with S.10 of the Bombay Rent Act, the tenant does
possess the requisite locus standi to file a complaint pursuant to public
C
notice issued under Rule 15(1) or pursuant to special written notice issue
under Rule 15(2) as well as the right to file an appeal under S.406. The
tenant is a directly affected party and it would not be just or equitable to
deny him such a right unless the statute says so specifically. [73-E, 74-H]
1.2. The tenant or tenants filing the appeal would not only have to
D deposit the disputed tax proportionate to the premises occupied by them
but the disputed tax with respect to the whole of the premises. [75-F]
2. In view of the .non-obstante clause contained in proviso (aa), it
must be held that for the purpose of the Municipal Corporations Act, the
actual rent received is the annual rent for the purposes of determining the
E annual letting value, where the standard rent is not fixed under s.11 of the
Bombay Rent Act and such actual rent received constitutes the basis for
determining the annual letting value, rateable value and property taxes. Io
such cases, actual rent received should be deemed to be the reasonable
rent. [81-B, 87-F)
F
Municipal Corporation, Indore & Ors. v. Smt. Ratna Prabha & Ors.,
[1977] 1 S.C.R. 1017 and Indian Oil Corporation Ltd. v. Municipal Corporation & Ors., (1995) 3 J.T. 626, followed.
Srikant Jituri & Ors v. Corporation of the City of Belgaum, (1994) 6 J.T.
G 496, referred to.
Corporation of Calcutta v. Smt. Padma Debi, [1962) 3 SCR 49; Corporation of Calcutta v. Life Insurance Corporati

## Text

_Characters 0–39,940 of 64,756. This is a partial read: ask again with offset=39940 for what follows._

ASSTT. GEN. MANAGER, CENTRAL BANK OF INDIA ETC.
A
v.
-·
COMMISSIONER, MUNICIPAL CORPORATION,
AHMEDABAD ETC. ETC.
MAY 9, 1995
B
[B.P. JEEVAN REDDY AND SUJATA V. MANOHAR, JJ.]
Bombay Provincial Municipal Corporation Act 1949-Ss. 406 and 407
r/w Taxation Ru/es-Rules 15 (1) and (2}-Whether tenant of a building entitled to file complaint and appeal against property tax assessment c
order-Held, yes; would not be just or equitable to deny such right-Bombay
Rents,Hotel and lodging House Rates Control Act 194-f-S.IO.
Bombay Provincial Municipal Corporation Act 1941)-/'roviso (aa) to
S.2(1A) (ii}-Whether annual rent for determining annual letting value is
D
actual rent or standard rent under the Bombay Rent Act-Held; actual rent
received is the annual rent.
S.406 of the Bombay Provincial Municipal Corporation Act, 1949
('Act') provides for appeals against fixation of rateable value or taxes to
be filed within fifteen days after accrual of the cause of complaint. AccordE
ing to clauses (a), (b) and (c) of S.407, the cause of complaint arises when
the complaint against the assessment, enhancement or determination of
property tax is disposed of by the Commissioner. Rule 15(1) of the
Taxation Rules in Schedule A to the Act provides for complaints against
assessment of rateble value. Rule 15(2) states that when the premises is
entered in the assessment book for the first time or its rateable value is F
increased, the Commissioner will give a special written notice to either the
owner or occupier of the premises informing him that any complaint
~
thereagainst will be received within fifteen days from service of the notice.
The appellants who were tenants of various buildings covered by the G
Act unsuccessfully contended before the Gujarat High Court that since the
.
'
landlord invariably passed on to them burden of increased property taxes
under s.10 of the Bombay Rents, Hotel and Lodging House Rates Control
Act, 1944 ('Bombay Rent Act'), they had a direct stake in the determination
and assessment of property tax and were accordingly entitled to file
complaints and appeals thereagainst •
H
...
63
64
SUPREME COURT REPORTS (1995) SUPP: 1 S.C.R.
A
The second contention of the appellants was that even where the
B
standard rent under the Bombay Rent Act was not fixed for the premises,
the annual rent for which the building may be expected to be left, for the
purpose of determining the annual letting value, was the standard rent
alone and not the actual rent.
Allowing the appeals in part, this Court
HELD : 1.1. Under the scheme of the Bombay Provincial Municipal
Corporations Act read with S.10 of the Bombay Rent Act, the tenant does
possess the requisite locus standi to file a complaint pursuant to public
C
notice issued under Rule 15(1) or pursuant to special written notice issue
under Rule 15(2) as well as the right to file an appeal under S.406. The
tenant is a directly affected party and it would not be just or equitable to
deny him such a right unless the statute says so specifically. [73-E, 74-H]
1.2. The tenant or tenants filing the appeal would not only have to
D deposit the disputed tax proportionate to the premises occupied by them
but the disputed tax with respect to the whole of the premises. [75-F]
2. In view of the .non-obstante clause contained in proviso (aa), it
must be held that for the purpose of the Municipal Corporations Act, the
actual rent received is the annual rent for the purposes of determining the
E annual letting value, where the standard rent is not fixed under s.11 of the
Bombay Rent Act and such actual rent received constitutes the basis for
determining the annual letting value, rateable value and property taxes. Io
such cases, actual rent received should be deemed to be the reasonable
rent. [81-B, 87-F)
F
Municipal Corporation, Indore & Ors. v. Smt. Ratna Prabha & Ors.,
[1977] 1 S.C.R. 1017 and Indian Oil Corporation Ltd. v. Municipal Corporation & Ors., (1995) 3 J.T. 626, followed.
Srikant Jituri & Ors v. Corporation of the City of Belgaum, (1994) 6 J.T.
G 496, referred to.
Corporation of Calcutta v. Smt. Padma Debi, [1962) 3 SCR 49; Corporation of Calcutta v. Life Insurance Corporation of India, [1971) 1 SCR
248; Gzmtur Municipal Council v. Guntur Town Rate Payers' Association
Etc., [1971] 2 SCR 423; Dewan Dault Rai Kapoor v. New Delhi Municipal
H Committee, [1980] 2 SCR 607 and Morvi Municipality v. State of Gujarat,
.-
CENTRAL BANK OF INDIA v. M.C., AHMED ABAD [JEEVAN REDDY, J.]
65
·~
(1993] 2 sec 521, distinguishe~
A
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5405 of
1995 Etc. Etc.
From the Judgment and Order dated 8.9.94 of the Gujarat High
Court in F.A. No. 158 of 1994.
B
V.R. Reddy, Additional Solicitor General, G.L. Sanghi, R.F.
Nariman, Arnn Jaitley, N.S. Sistani, B.K. Mehta, Soli J. Sorabjee, Ms.
Reema Bhandari, M.N. Shroff Mrs. Neelam Kalsi, Vimal Dave, P.P. Singh,
E.R. Kumar, Ms. Simmi Kumar, P.H. Parekh, P.R. Seetharaman, K.V. c
Mohan, G.S. Sistani, Maninder Singh, Bhaskar P. Tann, Mahrook N.
Kerawala, Mukul Mudgal, D.A. Dave and Ms. Meenakshi Arora for the
Intervenors for the Appearing parties.
//
The Judgment ·of the Court was delivered by
B.P. JEEVAN REDDY, J. Delay condoned.
D
Leave granted. Heard S/Sri G.L. Sanghi, Rohinton Nariman, V.R.
Reddy and Andhyarujina for the appellants and S/Sri F.S. Nariman, Soli
Sorabjee, B.K. Mehta for the respondents.
These appeals are preferred against the judgment of the Gujarat E
High Court in a batch of first appeals. Two questions arise for consideration viz., (i) whether a tenant of a building is entitled to file and maintain
an appeal against the order assessing the property tax under the provision
of the Bombay Provincial Municipal Corporation Act, 1949 as applicable
in the State of Gujarat and (ii) whether proviso (aa) to sub-clause (ii) of F
clause (lA) of Section 2 of the said Act is valid and effective. Clause (lA)
defines the expression "Annual Letting Value". Proviso (aa) says that where
in respect of any building or land or premises, standard rent is not fixed
under Section 11 of the Bombay Rents, Hotel and Lodging House Rates
Control Act, 1944 (Bombay Rent Act) "the annual rent received by the G
.la_
owner in respect of such building or land or premises shall, notwithstanding
anything contained any other law for the time being in force, be deemed
to be the annual rent for which such building or land or premises might
reasonably be expected to let from year to year with reference to its use".
J
The Gujarat High Court has held on the first question that an appeal can
be preferred only by the owner of the building and not by any other person H
66
SUPREME COURT REPORTS [1995) SUPP. 1 S.C.R.
A
including the tenant. On the second question, it has recorded its opinion
on the meaning and effect of proviso (aa).
Tenant right to object to assessment and his rent to file appeal:
B
The contention of the learned counsel for the appellants-tenants is
this: by virtue of the agreements entered into between the appellants and
their respective landlords, the obligation to discharge the property taxes
has been placed exclusively upon the tenants'. The landlord receives the
rent exclusive of the property taxes which means that any increase/enhancement of property taxes affects the tenant and tenant alone and not the
C landlord. The tenants, therefore, have a direct stake in determination/assessment of property taxes. Even apart from the agreements between the
parties, Section 10 of the Bombay Rent Act empowers the landlord to
increase the rent correspondingly where the rates or cesses payable in
respect of the said premises (which includes the property taxes) are
D
enhanced. Inasmuch as the liability to pay the property taxes is cast upon
the tenants both by virtue of the agreement between the parties and also
by virtue of the Bombay Rent Act, the landlords are not taking any interest
nor are they filing complaints or taking other proceedings to have the
property taxes correctly assessed. In many cases, the landlords are using
the enhancement of assessment as a lever of pressure to make the tenant
E vacate the premises. Notwithstanding such direct interest of the tenant in
the matter of determination/assessment of property taxes, the High Court
has held that they have no right to file an appeal against the assessment
of property taxes. This is causing grave prejudice to the tenants. They are
being punished by uncalled for increases in property taxes while at the
F
same time depriving them of the right to appeal and to question the
enhancement. The scheme and provisions of the Municipal Corporations
Act do enable the tenant to question the assessment or the enhancement
in assessment, as the case may be, in respect of the premises occupied by
him and also to file appeal and take other proceedings in that behalf. On
G the other hand, it is submitted by the learned counsel for the corporation
that the Act makes the owner of the premises alone primarily liable for
property laxes and it is that person alone who is entitled to file a complaint
or appeal in case he feels aggrieved by the assessment or enhancement of
the assessment. The Act does not confer any such right up~n the tenant
nor does it recognise any such right of the tenant impliedly. The learned
H counsel support the reasoning and conclusion of the Gujarat High Court
-
-·
CENTRAL BANK OF INDIA v. M.C.,AHMEDABAD [JEEVANREDDY,J.)
67
in this behalf.
For a proper appreciation of this question, it is necessary to notice
the relevant provisions of the Bombay Municipal Corporations Act as well
as the Bombay Rent Act.
Section 127 of the MuniCipal Corporation Act obliges the corporation to impose the taxes specified in sub-section (1). The first and the
foremost tax mentioned in the sub-section is "(a) property taxes". Section
139 specifies the person who shall be primarily liable for property taxes
assessed upon any premises. Section 139 reads as follows :
"139. (1) Subject to the provisions of sub-section (2) property taxes
assessed upon any premises shall be primarily leviable as follows,
namely:
(a) if the premises are held immediately from the Government or
from the Corporation, from the actual occupier thereof :
Provided that property taxes due in respect of buildings vesting
in the Government and occupied by servants of the Government
or other person on payment of rent shall be leviable primarily from
the Government;
(b) if the premises are not so held --
(i) from the lessor if the premises are let; i
(ii) from the superior lessor if the premises are ·sub-let;
(iii) from the person in whom the right to let the premises vests if
they are unlet.
A
B
c
D
E
F
(2) If any land has been let for any term exceeding one year to a
tenant and such tenant has built upon the land, the property taxes G
assessed upon the said land and upon the building erected thereon
shall be primarily leviable from the said tenant or any person
deriving title from the said tenant by the operation of law or by
assignment or transfer but not by sub-lease or the legal representative of the said tenant or person whether the premises be in
the occupation of the said tenant or person or legal representative H
A
B
68
SUPREME COURT REPORTS [1995] SUPP.1 S.C.R.
or a sub-tenant :
Provided that where the building so erected on the land is of
a temporary nature or is unauthorised the property taxes upon the
land and building shall be primarily leviable from the person in
whom the right to let the land vests."
Insofar as it relevant for our purposes, sub-section (1) says that
where the premises are let, the property taxes in respect of that premises
shall be primarily leviable upon the lessor. Sub-section (2), however,
clarifies that where any land has been let for a term exceeding one year to
C a tenant and such tenant has build upon the land, the property taxes upon
such land and building shall be primarily leviable from such tenant. The
proviso to sub-section (2) says that if the construction made is of a
temporary nature or is unauthorised, the primary liability continues to
remain with the lessor. Section 140 provides the situations in which oc,
cupiers of premises are made liable for paying property taxes. Having
D
regard to the contentions urged before us, it would be appropriate to quote
the section in full :
E
F
G
"140. (1) If the sum due on account of any property tax remains
unpaid after a bill for the same has been duly served under the
rules upon the person primarily liable for the payment thereof and
the said person be not the occupier for the time being of the
premises in respect of which the tax is due, the Commissioner may
serve a bill for the amount upon the occupier of the said premises,
or, if there are two more occupiers thereof, may serve a hill upon
each of them for such portion of the sum due as bears to the whole
amount due the same ratio which the rent paid by such occupier
bears to the aggregate amount of rent paid by them both or all in
respect of the said premises.
(2) If the occupier or any of the occupiers fails within thirty days
from the service of any such bill to pay the amount therein claimed,
the said amount may be recovered from him in accordance with
the rules.
(3) No arrear of a property tax shall be recovered from any
occupier under this section which has remained due for more than
H
one year, or which is due on account of any period for which the
CENTRAL BANK OF INDIA v. M.C.,AHMEDABAD [JEEVANREDDY,J.]
69
occupier was not in occupation of the premises on which the tax A
is assessed.
(4) If any sum is paid by, or recovered from, an occupier under
this section, he shall be entitled to credit therefor in account with
the person primarily liable for the payment of the same.
Sub-section (1) says that (a) where the property tax due in respect
B
of a premises remains unpaid inspite of service of a bill upon the person
primarily liable therefor and (b) if such person is not the occupier of the
premises for the time being, (c) the Commissioner may serve a bill for the
amount upon the occupier of the premises and ( d) if the premises is C
occupied by more than one occupier, the bill shall be served upon each of
the occupiers specifying the amount proportionate to the rent he pays to
the total rent payable in respect of the said premises. Sub-section (2)says
that if the occupier fails to pay the sum mentioned in the bill within thirty
days of its service, such amount can be recovered from him in accordance D
with the rules. Sub-section (3), however, clarifies that (i) no arrear of a
property tax shall be recovered from any occupier under Section 140 which
has remained due more than one year and (ii) no tenant shall be called
upon to pay taxes in respect of period he was not occupying the premises.
Sub-section ( 4) confers upon the tenant a right to recover the amount paid
by him under Section 140 from out of the rent payable by him to his lessor.
E
It is obvious that the right given to the corporation by Section 140 to
recover the taxes from the occupier (other than the person primarily liable)
does not mean that the corporation's right to recover it from the person
primarily liable for such taxes is in any way affected. The right to proceed
against the occupier is an additional right given to corporation. Section 141
F
declares that property due under the Act shall be the first charge upon the
premises subject to the priority of land revenue due, if any, thereon. It
further declares that the charge created by it shall also extend to movable
properties found within or upon such premises and belonging to the person
liable for such taxes - which may mean movables of the tenant of the
premises in the manner and to the extent specified in Section 140.
G
Section 406 provides for appeals against fixation of any rateable value
or taxes. The section does not specify the person who is entitled to file the
appeal. It only says that appeals against rateable value or tax fixed or
charged under the Act shall be heard and determined by a Judge - which H
70
SUPREME COURT REPORTS (1995] SUPP. 1 S.C.R.
A
means in the city of Ahmedabad, the Chief Judge of the Court of Small
Causes or such other Judge of the Court as the Chief Judge may appoint
in that behalf. [vide clause (29) of Section 2]. Sub-section (2) provides the
conditions subject to which the appeals shall be entertained. It is appropriate to quote the section in full :
B
c
D
E
F
G
"406.(1) Subject to the provisions hereinafter contained, appeals
against any rateable value or tax fixed or charged under this Act
shall be heard and determined by the Judge.
(2) No such appeal shall be entertained unless --
(a) it is brought within fifteen days after the accrual of the cause
of complaint;
(b) in the case of an appeal against a rateable value a complaint
has previously been made to the Commissioner as provided under
this A.ct and such complaint has been disposed of;
( c) in the case of an appeal against any tax in respect of which
provision exists under this Act for a complaint to be made to the
Commissioner against the demand, such complaint has previously
been made and disposed of;
( d) in the case of an appeal against any amendment made in the
assessment book for. property taxes during the official year, a
complaint has been made by the person aggrieved within fifteen
days after he first received notice of such amendment and his
complaint has been dis posed of;
( e) in the case of an appeal against a tax, or in the case of an
appeal made against a rateable value, the amount of the disputed
tax claimed from the appellant, or the amount of the tax chargeable
on the basis of the disputed rateable value, up to the date of filing
the appeal, has been deposited by the appellant with the Commissioner;
Provided that where in any particular case the judge is of the
opinion that the deposit of the amount by the appellant will cause
undue hardship to him the judge may in his discretion, either
H
unconditionally or subject to such conditions as he may think fit
CENTRAL BANK OF INDIA v. M.C., AHMED ABAD [JEEVAN REDDY, J.]
71
..
to impose, dispense with a part of the amount deposited so howA
ever that the part of the amount so dispensed with shall not exceed
'
twenty five percent of the amount deposited or required to be
deposited."
According to sub-section (2), the appeal must be preferred within fifteen
B
days "after the accrual of the cause of complaint". The expression "cause
of complaint" is defined in Section 407, which reads as follows :
"407. For the purposes of section 406, cause of complaint shall be
deemed to have accrued as follows, namely :
(a) in the case of an appeal against a rateable value, on the day c
when the complaint made to the Commissioner against such value
is disposed of;
(b) in the case of an appeal against any tax referred to in a clause
(c) of sub-section (2) of the said section on the day when the D
complaint against the tax is disposed of by the Commissioner;
( c) in the case of an appeal against any amendment made in the
assessment book for property taxes during the official year, on the
day when the complaint made to the Commissioner by the person
aggrieved against such amendment is disposed of;
E
( d) in the case of an appeal against a tax not covered by clause
(b) above on the day when payment thereof is demanded or when
a bill therefore is served."
According to clauses (a), (b) and (c) of Section 407, the cause of F
complaint arises when the complaint against the assessment/enhancement/determination is disposed of by the Commissioner.
Chapter-VIII in Schedule-A to the Act sets out the Taxation Rules.
It is necessary to notice a few relevant rules in this chapter. Rule 7 G'
'---
prescribes the manner in which rateable value shall be determined. Rue 8
empowers the Commissioner to call for information or return from the
owner or occupier of the building, land or premises as also to enter and
inspect the premises for the purpose of enabling him to determine its
rateable value. Rule 12(2) says that if the person in occupation of the
premises refuses to give true information necessary for determining the H
72
SUPREME COURT REPORTS [1995] SUPP. 1 S.C.R.
A
person primarily liable for the payment of property taxes, such person shall
him self be liable until such information is obtained for all property taxes
leviable on the premises of which he is in occupation. Rule 14 says that the
assessment book shall be open to inspection by a person who claims to be
either the owner or occupier of the concerned premises. Sub-rule (1) of
B
c
Rule 15 says that where the assessment books are prepared in the manner
prescribed in the rules, the Commissioner shall give a public notice specifying a day which is not less than fifteen days from the date of publication
of such notice within which complaints against the amount of any rateable
value entered in the assessment book will be received in his office. Sub-rule
(2), upon which strong reliance has been placed by the learned counsel for
the appellants, provides that where any premises is entered in the assessment book for the first time or where the rateable value of any premises
is increased, "the Commissioner shall, as soon as conveniently may be after
the issue of the public notice under sub-rule (1) give a special written
notice to the owner or occupier of the said premises specifying the nature
D of such entry and informing him that any complaint against the same will
be received in his office at any time within fifteen days from the service of
the special notiFC"· Rule 20 says that upon the representation of any person
concerned or on the basis of any other information received by him during
the official year, the Commissioner may amend the entries in the assessE
F
G
ment book. Such amendment may relate to the matters specified in the said
sub-rule which include increase or reduction in the rateable value.
Section 10 of the Bombay Rent Act provides the situation in which
the landlord is entitled to enhance the rent. Section 10 reads :
"10. Increase in rent on account of payment of rates etc. exceptedWhere a landlord is required to pay to a local authority in respect
of any premises any rate, cess or tax imposed or levied for the
purposes of such authority he shall be entitled to make an increase
in the rent of the premises by an amount not exceeding the increase
paid by him by way of such rate, cess or tax over the amount paid
in the period of assessment which included the date of the coming
into operation of this Act or the date on which the premises were
first let, whichever is later and such increase in rent shall not be
deemed to be an increase for the purposes of section 7."
H
According to this section, where there has been an increase in the
'
-
CENTRALBANKOFINDIA v. M.C.,AHMEDABAD[JEEVANREDDY,J.]
73
rate, cess or tax imposed upon a premise after the premise has been let to A
the tenant, the landlord shall be entitled to enhance the rent correspondingly. Indeed, clause (7) of Section 5 defines the expression "permitted
increase
11
• It means, an increase in rent permitted under the provisions of
this Act and Section 10 is one such provision.
A resume of the ab~ve provisions discloses the rights as well as the
obligations of the tenants of the premises. Section 10 of the Bombay Rent
Act empowered the landlord to pass on the burden of increase in property
taxes to the tenant. Having regard to the normal course of human conduct,
B
we must presume that every landlord will invariably pass on the burden of
enhancement to the tenant. Section 140 of the Municipal Corporations Act C
makes him liable to pay the property taxes in case the landlord fails to pay
the same. No doubt, this liability is a limited one as explained above and
he is also entitled to be reimbursed by the landlord in that behalf , even so
it is a liability cast upon him by law. Certain rights are also conferred upon
the Rules aforementioned. Coupled with this is the fact that neither Rules D
12 to 20 nor Section 406 contain any words indicating that the landlord
alone can file the complaint and appeal. In such circumstances, it would
not be just and equitable to deny to the tenant the right of appeal and the
right to file the complaint. We are inclined to hold that in the scheme of
the Municipal Corporations Act read with Section 10 of the Bombay Rent
Act, the tenant does possess the requisite locus standi to file a complaint E
pursuant to public notice issued under Rule 15(1) or pursuant to special
written notice issued under Rule 15(2) as well as the right to file an appeal
under Section 406. This should be more so, if there is an agreement
between the landlord and tenant whereunder the obligation to discharge
and pay the property taxes in cast upon the tenant. It is true that this is a F
private arrangement between the parties and cannot form the basis of a
legal right but it is certainly an additional factor conferring the requisite
locus standi upon the tenant. Even where the Bombay Rent Act is not
applicable to a particular building, the existence and proof of such an
agreement would enable the tenant to claim the requisite locus standi. G
Holding otherwise would be grossly unjust to the tenant. While he made
liable, statutorily or by private treaty, for the enhancement in the property
taxes, he is not being allowed to question the same. It is true, as contended
by the learned counsel for the corporation, that no prudent owner of a
building will allow the assessment to be enhanced unreasonably just to spite
the tenant, it cannot at the same time be said that the tenant has no right H
74
SUPREME COURT REPORTS [1995] SUPP. 1 S.C.R.
A to file an appeal against the assessment or enhancement, as the case may
be, when he is a person directly affected by such assessment/enhancement.
There is yet another circumstance: any person proposing to file an appeal
under Section 406 has to deposit the disputed tax as contemplated by
Section 406(2)(e) as a condition for entertaining the appeal; since the
B
c
landlord can pass on the on the enhanced burden to the tenant according
to the Bombay Rent Act and also where there is a stipulation between him
and the tenant whereunder the liability to pay the property taxes is exclusively placed upon the tenant, the landlord would not be minded to
make the trouble of filing the appeal since he would be obliged to deposit
the disputed tax; he may think · and probably legitimately · why should
he deposit the disputed tax and file the appeal when the burden of the
said tax is not falling upon him. This is also a relevant circumstance in
favour of reading a right (to object and appeal) in the tenant. At the same
time, it cannot be predicated that the special notice contemplated by Rule
15(2) has necessarily to be served upon the tenant. No such right can be
D
claimed by the tenant nor such an obligation be cast upon the corporation.
The tenant has to be vigilant. There will be a public notice under Rule
15(1) wherever an enhancement is proposed. Even the special notice under
Rule 15(2) may, in the normal course, be served upon him because he is
in occupation of the premises but that may or may not happen. (In a given
E
F
case, the landlord may be residing in a portion of the same building; there
may be more than one tenant in the building and so on.) Even if the special
notice is not served upon him, he has to file the complaint within time
prescribed by the notices and the Rules. He is equally bound to observe
the conditions prescribed in sub-section (2) of Section 406 while filing an
appeal. Inter alia, he is not only obliged in file the appeal within the
prescribed period of limitation but also to make the deposit as contemplated by clause ( e) of sub-section (2) of Section 406, subject, of course,
to the proviso to the said clause.
For all the above reasons, we find ourselves unable to agree with the
High Court that the tenant cannot file an appeal and that it is only the
G
owner/landlord of the premises who can file an appeal under Section 406
of the Act. The High Court has proceeded on the footing that since the
owner of the premises is primarily liable for the property taxes and also
because the Act does not specifically confer upon the tenant the right to
object and file an appeal, the tenant has no such right. But, as explained
H hereinabove, the tenant is a directly affected party and it would not be just
L
CENTRAL BANK OF INDIA v. M.C., AHMED ABAD [JEEVAN REDDY, J.]
75
or equitable to deny him such a right unless the statute says so specifically. A
We have pointed out supra that it does not create any such bar even by
implication. Nor is the right to file an appeal conditioned upon the filing
of a complaint by the tenant. In other words, it cannot be said that since
the tenant has to filed the complaint in a given case, he has no right to file
the appeal. The right to appeal is governed by Sections 406 and 407.
Section 407 speaks of disposal of complaint; it does not say that the
complaint must have been filed by the person proposing to file the appeal.
B
It may be noticed that the right of appeal conferred by Section 406 is more
akin to the right of appeal provided by Section 96 of the Code of Civil
Procedure. It provides a right of appeal but does not say who can file the
appeal. It means that any person who is affected by or who can be said to C
be aggrieved with the order is entitled to maintain an appeal so long as he
complies with the conditions attaching the said appeal. Where the tenant
lodges a complaint, he can directly file an appeal under Section 406 but
where he himself has not filed a complaint, he has to file the appeal with
the leave of the appellate court.
We do, however, recognised that the above holding gives rise to
certain practical difficulties. We may elaborate. Where there is one tenant
for one premises, no difficulty will arise in applying the above principle.
D
(By one premises, we mean a unit for the purpose of assessment of
property taxes.) But there may be cases where there is more than on tenant
E
in one premises. There may indeed be cases where one premises is occupied by a large number of tenants in small portions. If only one or some
of such tenants file an appeal, the decision obtained by them would no
doubt apply to all but before the appeal can be filed, the tenants will have
to deposit the disputed tax as contemplated by Section 406(e).In other
words, the tenant or tenants filing the appeal would not only have to
deposit the disputed tax proportionate to the premises occupied by them
but the disputed tax with respect to the whole of the premises. This may
be a little hard but looking to the schemes of the Act it is not possible for
F
us to say that such tenant or tenants would be entitled to say that they
would deposit the disputed tax proportionate to the portions occupied by G
them only or file an appeal only in respect of the portion of the property
occupied by him. No such splitting can be thought of or permitted. Such
difficulties, we must say, cannot include us to hold that the tenant has no
right to prefer a complaint or to prefer an appeal. The circumstances
mentioned iri the preceding paragraphs are strongly suggestive of such a
right in the tenant.
H
76
SUPREME COURT REPORTS [1995] SUPP. 1 S.C.R.
A
The meaning and effect of proviso (aa) to clause (IA) in Section 2:
B
c
Proviso (aa) to sub-clause (ii) in clause (lA) of Section 2 of the
Municipal Corporations Act provides that in cases where standard rent is
not fixed under Section 11 of the Bombay Rent Act in respect of a building,
land or premises, the actual rent received by the landlord shall be deemed
to be "the annual rent for which such building etc. might reasonably be
expected to let from year to year with reference to its use" within the
meaning of and as contemplated by sub-clause (ii) in Clause (lA). The
contention of the learned counsel for the appellants is that even where the
standard rent is not fixed, it must be presumed that "the annual rent for
such buildings or lands or premises might reasonably be expected to let
from year to year with reference to its use" is the standard rent alone and
not the actual rent received. The contention is that the corporation is not
entitled to look to the actual rent received and that it is entitled to look
only to standard rent because the landlord is not entitled in law to receive
D
anything more than the stanclard rent. It is submitted that even where the
standard rent is not fixed, an effort must be made by the assessing
authorities to ascertain the standard rent in accordance with the provisions
of the Bombay Rent Act and then adopt it as "the annual rent for which
such building, land or premises might reasonable be expected to let from
E
year to year with reference to its use" for the purposes of determining
Annual Letting Value. Indeed, the validity of proviso (aa) is also questioned (See the ground (A) in the grounds of appeal in Civil Appeal No.
5405 of 1995 arising out of S.L.P. (C) No. 21538 of 1994 filed by the Central
Bank of India) though not urged before us. Strong reliance is placed upon
F
the decisions of this Court in Corporation of Calcutta v. Smt. Padma Debi,
[1962] 3 S.C.R. 49, Corporation of Calcutta v. Life Insurance Corporation of
India, [1971] 1 S.C.R. 248, Guntur Municipal Council v. Guntur Town Rate
Payers' Association etc., [1971] 2 S.C.R. 423, Dewan Dau/at Rai Kapoor v.
New Delhi Municipal Committee & Anr., [1980] 2 S.C.R. 607 and the more
recent decision in Morvi Municipality v. State of Gujarat & Ors., [1993] 2
G
S.C.C. 521. On the other hand, the contention of the learned counsel for
the corporation is that the decisions relied upon by the appellants' counsel
have no application and are clearly distinguishable on account of the
non-obstante clause in proviso (aa) concerned herein. It is submitted that
the words "notwithstanding anything contained in any other law for the time
H
being in force" found in proviso (aa) were not to be found in the enactments dealt with in the aforesaid decisions. They rely upon the decision of
·'
CENfRALBANKOFIND!A v. M.C.,AHMEDABAD [JEEVANREDDY,J.]
77
this Court in Municipal Corporation Indore & Ors. v. Smt. Ratna Prabha & A
Ors., [1977] 1 S.C.R. 1017 rendered with reference to Madhya Pradesh
Municipal Corporation Act, 1956 and Madhya Pradesh Accommodation
Control Act, 1961 - and reaffirmed recently in Indian Oil Corporation Ltd.
v. Municipal Corporation & Ors., (1995) 3 J.T. 626, rendered by J. S.
Verma, J. and one of us (Sujata V. Manohar, J.) - where a similar
non-obstante clause occurred in Section 138(b) of the Municipal Corporations Act and on which basis the decisions aforesaid were distinguished.
For a proper appreciation of this contention, it is necessary to refer
to a few provisions of the Municipal Corporations Act and the Bombay
B
Rent Act.
C
Section 129(c) provides that a general tax of not less than twelve
percent but not more than thirty percent of the rateable value of the
building/lands may be levied if the corporation so determines a on a
graduated scale. The expression "rateable value" is defined in clause (54) D
of Section 2 to mean, "the value of any building or land fixed whether with
reference to any given premises or otherwise in accordance with the
provisions of this Act and the rules for the purpose of assessment to
property taxes". Rule 7 of the Taxation Rules framed under the Act
prescribes the manner in which rateable value is to be determined. Rule
7(3) says that in order to fix the rateable value of any building, land or E
premises, there shall be deduction from the amount of the Annual letting
value of such building a sum equal to ten percent of the Annual Letting
Value and the said deduction shall be in lieu of all allowances for repairs
or on any other account whatsoever. It is in this manner that the definition
of "Annual Letting Value" assumes importance. The said definition, as
F
already stated, occurs in clause (lA) in Section 2. Sub-clause (i) of the
definition says that for the period prior to Isl April, 1970, Annual Letting
Value shall mean the rent at which the premises·-can be reasonably be
expected to be let if the Bombay Rent Act were not in force. We are not
concerned with this sub-clause. Sub-clause (ii), which is relevant for our G
purposes, says that "in relation to any other period, (Annual Letting Value
shall mean) the annual rent for which any building or land or premises,
exclusive of furniture or machinery contained or situate therein or thereon,
might reasonably be expected to let from year to year with reference to its
use and shall include all payments made or agreed to be made to the
owners by a person (other than the owner) occupying the building or land H
78
SUPREME COURT REPORTS [1995] SUPP. 1 S.C.R.
A
or premises on account of occupation, taxes, insurance or other charges
incidental thereto". The proviso appended to sub-clause (ii) is of crucial
relevance herein and must, therefore, be set out in full:
B
c
D
E
F
G
H
"(a) (I)n respect of any building or land or premises the standard
rent of which has been fixed under section 11 of the Bombay Rents,
Hotel and Lodging House Rates Control Act, 1947, the annual
Rent thereof shall not exceed the annual amount of the standard
rent so fixed;
(aa) in respect of any building or land or premises, the standard
rent of which is not fixed under section 11 of the Bombay Rents,
Hotels and Lodging House Rates Control Act, 1947, the annual
rent received by the owner in respect of such building or land or
premises shall, notwithstanding anything contained in any other law
for the time being in force , be deemed to be the annual rent for
which such building or land or premises might reasonably be
expected to let from year to year with reference to its use;
(aaa) clause (aa) shall not apply to a case where the annual rent
received by the owner in respect of such building or the owner in
·respect of such building or land or premises is in the opinion of
the Commissioner less than the annual rent for which such building
or land or premises might notwithstanding anything contained in
any other law for the time being in force, reasonably be expected
to let from year to year with reference to its use;
(b) in the case of any land of a class not ordinarily let the annual
rent of which cannot in the opinion of the Commissioner be easily
estimated, the annual rent shall be deemed to be six per cent of
the estimated market value of the land at the time of assessment;
( c) in the case of any building of a class not ordinarily let, or in
the case of any industrial or other premises of a class not ordinarily
let, or in the case of a class of such premises the building or
buildings in which are not ordinarily let, if the annual rent thereof
cannot in the opinion of the Commissioner be easily estimated, the
annual rent shall be deemed to be six per cent of the total of the
estimated market value, at the time of the assessment, of the land
on which such building or buildings stand or, as the case may be,
,-
..
CENTRAL BANK OF INDIA v. M.C.,AHMEDABAD [JEEVANREDDY,J.]
79
of the land which is comprised in such premises, and the estimated A
cost, at the time of the assessment, of erecting the building or, as
the case may be, the building or buildings comprised in such
premises;
11
Now let us see what does each limb of the proviso say. Proviso (a)
says that where the standard rent has been fixed under Section 11 of the
Bombay Rent Act in respect of any building or land, the annual rent of
such building/land shall not exceed the annual amount of the standard rent
so fixed. Proviso (aa) says that where standard rent has not been fixed
under Section 11 of the Bombay Rent Act in respect of any building, land
B
or premises, the annual rent received by the owner in respect of such C
building etc.